FCA hits Aviva with £8.2m fine for outsourcing failures

Aviva has been fined £8.25m by the UK financial regulator for failures around its arrangements to protect client assets outsourced to other providers.

The Financial Conduct Authority said it penalised Aviva's UK pension trustees and fund wrapper arms for insufficient controls over its outsourced providers and warned "firms are reminded that regulated activities can be delegated but not abdicated".

Aviva was adjudged to have failed to have enough control and to be too slow in detecting risks and compliance issues because of its insufficient investment in resources when it outsourced administration of client money and some other functions to third party administrators, which breached the FCA's Client Assets Sourcebook (CASS) rules.

Rules covering client assets aim to protect client money and assets if financial firms become insolvent, ensuring the quick return of cash and assets.

“Aviva outsourced the administration of client money and external reconciliations in relation to custody assets, but failed to ensure that it had adequate controls and oversight arrangements to effectively control these outsourced activities," said the FCA's director of enforcement and market oversight, Mark Steward.

He warned that other firms which also outsourced business like Aviva "should take this as a warning that there is no excuse for not having robust controls and oversight systems in place to ensure their processes comply with our rules" when CASS functions are outsourced.

He added: "This is the first CASS case in relation to oversight failures of outsourcing arrangements and we will continue to take action against firms that fall short of our CASS Rules.”